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March 18, 2016

Budget Update - Refinance of Bond Debt

Just this past week, the District completed a refinancing of $36.8M of outstanding debt associated with the $68.0M 2009 bond issue.  The $68.0M bond issue funded the construction of Cottonwood and the renovation of Canyon View, Sunset View, Southgate, Cascade, Lincoln, and Eastgate.

The District issued new debt at an average interest rate of 2.21% that will take the place of the refinanced or “refunded” debt of $36.8M that had an average interest rate of 5.00%.  The result is a savings of $4.2M in interest payments over the period 2016 to 2028. The savings is passed on to taxpayers through a slightly lower tax rate during the period.

Interest rates and the District financial position were the main factors driving the savings from the refunding.  Interest rates have continued to decline since last summer and the District recently received a top tier financial rating from Moody’s Investors Service.

The Moody’s rating was based primarily on steady enrollment growth, sizeable tax base, and a solid District financial position, including a healthy fund balance. A high financial rating results in lower interest rates on the debt issued since there is little risk to investors that the District would default on re-payments.

We have been monitoring the potential to refinance the outstanding debt for over a year. We are very pleased to have finally completed this transaction at a time when interest rates are near a historical low.  

Vic Roberts
Director of Business Operations

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